Monday, November 30, 2009

The image Dubai does not want you to see

The Sunday London Times newspaper was removed by authorities from shelves in the United Arab Emirates on Sunday amid intensive reporting of Dubai's debt problems, an executive at the paper said....A government official in Abu Dhabi, the capital of the U.A.E., said that the picture of Sheik Mohammed, which accompanied a story entitled: The sinking of Dubai's dream, was "offensive."

At a bankers conference in Dubai early this month, Dubai's ruler, Sheik Mohammed bin Rashid Al Maktoum, delivered a prepared address about Dubai's optimistic economic prospects in Arabic. Then he briefly switched to English to berate the media and other critics for fanning speculation of a rift with Abu Dhabi.

"So, to the people of you who nag over Dubai and Abu Dhabi, shut up," he said. The audience laughed and applauded.

Who's laughing now?

Jo Tatchell, author of A Diamond in the Desert, is a guest contributor in The Times today. She writes:

Abu Dhabi has been playing a long game. Quietly amassing vast oil riches (the true extent of which are unknown) it has been nursing a long-term objective: centralisation of the UAE under the leadership of the ruling Al Nahyan family, securing greater political power and influence abroad in the process.

The strategy is simple. Abu Dhabi will cherry-pick the successful big- name assets and transfer them to Abu Dhabi control. These deals have been under discussion for some months. It has already sought to secure majority stakes in the Burj skyscraper and the Emirates airline, symbolic jewels in Dubai Inc’s crown....Though undeclared, the hope is that these events will force the leadership of Dubai to resign. In a modern playout of ancient tribal politics Abu Dhabi wants Dubai reined in and put on a short leash. They are looking for the Makhtoums to fall in line with Abu Dhabi’s new vision for a modern Islamic state.

The Government of Dubai said today that it will not stand behind its wholly-owned subsidiary Dubai World, prompting fears that the company’s creditors could lose billions of dollars.

Today's comment, from Abdulrahman al-Saleh, the director general of Dubai’s Department of Finance, effectively confirms that country does not have enough money to repay Dubai World’s $60 billion of liabilities. Deloitte, the accountancy firm, has been called in to restructure the giant business....Many creditors had assumed that the structure of Islamic bonds implied there was state backing for this type of financing and Dubai’s failure to support the Nakheel debt could have damaging implications for the wider Islamic market.